Consumer Products and Services

How PMI reinvented the Big Tobacco investment case

6 Jun 2023

Cigarette makers traditionally promise low growth but hefty shareholder payouts. The $140 bln Marlboro producer, though, stopped buybacks and invested in smoke-free alternatives. To emulate its premium valuation, rivals Altria and BAT may have to ditch the industry playbook too.

Apple could overcome VR’s nerd and creepy factors

6 Jun 2023

Past attempts at virtual and augmented reality failed because the devices looked embarrassing, and the firms behind these efforts seemed untrustworthy. The headset the $2.8 trillion tech company rolled out on Monday isn’t an obvious success in its current form, but Apple has a better shot than others.

Brain implant needed to justify a $5 bln Neuralink

5 Jun 2023

Elon Musk’s startup promises brain-computer interfaces that do everything from curing disease to storing memories. The $5 bln valuation presupposes $3 bln of revenue in 10 years. That’s an optimistic timetable, even assuming Musk’s technology is successful.

Mediterranean chain Cava caters to starved market

5 Jun 2023

The falafel and hummus eatery is aiming for an IPO valuation of up to $2.2 bln, 70% higher than a private assessment in 2021. The company’s fast growth will be tantalizing despite a lack of profit. After a long dry spell for new equity issuance, though, it’s easy to overindulge.

Economic policies sacrifice poor Americans

2 Jun 2023

Smaller tax refunds, higher prices, and changes to food stamps hurt customers that shop at low-cost retailer Dollar General. Student loan relief is under threat, and other entitlements may be rolled back. Cash is being sucked from the system – directly from the poor’s pockets.

Target and Disney trip up on the Pride divide

31 May 2023

Their supportive positions on LGBTQ issues have attracted vocal enemies. But where Disney boss Bob Iger is stuck between employees and politicians, retailer Target is trying to placate customers. That’s the harder balancing act. Meanwhile shareholders will cast the deciding vote.

Petrol station tycoons’ debt fix has hidden flaw

30 May 2023

The Issa brothers are shifting UK filling stations to their Asda supermarket chain for $3 bln. The deal helps prop up their balance sheet and possibly expand elsewhere. But it leaves the grocer with extra costs and exposure to a sector at risk from the rise of electric vehicles.

Nvidia investors price in seven years of AI glory

25 May 2023

The semiconductor firm’s worth surged to $940 bln on hopes it will win from artificial intelligence. CEO Jensen Huang has an astonishing record, with earnings growing 20% annually for two decades. But Nvidia will have to maintain this pace until 2030 to justify its valuation.

Tesco’s diversity reboot has further to go

25 May 2023

The chair of the $24 bln UK grocer quit amid allegations of inappropriate comments. But Tesco also lags on diversity in its senior ranks. With its lowest paid staff mostly women and investors likely to be watching closely, it needs to be leading, not following.

Biden’s oil reserve plan is slippery slope

24 May 2023

America sold 180 mln barrels of oil from its strategic reserve last year when prices were high. It can top coffers now for less, but that window might not last long. Plus budget battles – and Biden’s fossil fuel agenda – making a needed fuel fill up look less likely.

It’s Netflix’s world, rivals just stream in it

24 May 2023

Disney, Warner Bros Discovery and Paramount are shifting strategies to stem losses on their TV and film services. Spending to amass subscribers is no longer the priority. Programming remains expensive, however. As the industry reshapes, its $160 bln pioneer retains star quality.

‘Greedflation’ loosens its grip on food retailers

24 May 2023

Suppliers like Unilever and Kraft Heinz are easing inflation-busting price rises that hit grocers hard. That will benefit profit margins at the likes of Kroger and Carrefour. Their next challenge will be convincing cash-strapped consumers to pay, and buy, more in supermarkets.

Meta becomes cross-border tech mascot

22 May 2023

The EU smacked the $630 bln social media giant with a record $1.3 bln fine over data transfers to the US. Meta will fight it, but a fix requires a cross-border agreement and differing philosophies on data access make that hard. Without it, Meta’s fine is a bigger tech problem.

Walmart plays the long game with dominance

18 May 2023

The $410 bln retailer is chipping away at e-commerce rival Amazon while also capturing customers who might shop at Target. Discretionary dollars are dwindling even among those consumers with more to put into their houses as Home Depot shows. That means Walmart will keep growing.

Shippers turn the tank around too slowly

17 May 2023

Americans are pulling back on spending after their pandemic-era shopping sprees. That's perhaps good news for inflation, but bad news for the shipping business, which is set for its biggest capacity jump since at least 2016.  As demand cools, shippers can’t pivot fast enough.

Activision is victim of clashing trustbuster whims

16 May 2023

Microsoft’s bid for the “Call of Duty” maker won Europe’s approval, with concessions, after UK and US regulators pushed back. International enforcers’ divergence on whether companies can offer fixes for deals they don’t like could be an impossible hurdle for big-ticket M&A.

To bet on China’s shoppers, ditch its companies

16 May 2023

While consumer bellwethers Alibaba and Tencent grapple with uneven retail spending, shares in foreign companies like LVMH and Tokyo Electron have rallied thanks in part to strong Chinese sales. With political risk rising, that’s a smarter way to trade the economic recovery.

Paying by plastic gets problematically popular

15 May 2023

Credit card debt hit $1 trln among US borrowers and is growing at the fastest rate in two decades. The number of new accounts keeps rising, too, as Chase, Capital One and other fee-hungry banks race to sign up customers. The trend stores up trouble, and not just for cardholders.

PayPal’s struggles make case for bold CEO choice

11 May 2023

Boss Dan Schulman is leaving a longer and tougher to-do list for whoever replaces him at the $71 bln digital wallet provider. Disappointing results sent the shares tumbling another 16%. It’s increasingly evident that a shakeup led by a creative-thinking outsider would be best.

Saving depositors is exercise in squaring circles

11 May 2023

Big US banks will pay a one-off $16 bln levy to cover the windup of SVB and Signature Bank. Lenders that benefited most will bear the heaviest burden but are also the most vulnerable. That trade-off is just an aperitif for bigger deposit-insurance dilemmas that lie in store.